When people think of hedge funds, they picture high-energy trading and big profits.
But that’s only the part the world gets to see.
Behind every trade is a long list of invisible tasks — hours spent working with auditors, regulators, administrators, lawyers, brokers, and compliance teams. The truth is, most of a hedge fund manager’s time isn’t spent trading at all. It’s spent running the business.
The Rules Never End
Every hedge fund operates under a thick layer of regulations. The SEC, FINRA, and other agencies require constant filings, disclosures, and compliance reports.
Even small funds spend huge amounts of time keeping everything updated and organized. Miss one form or file something late, and you risk an audit or fine. For many managers, the real job is paperwork — even though trading is the part they love doing most.
Opening a Brokerage as a Fund
Opening a brokerage account for a hedge fund isn’t like opening one for a retail investor.
It’s a long and often painful process.
Every prime broker or institutional trading platform requires a full legal and compliance review before allowing your fund to trade on it. That means submitting the fund’s offering documents, organizational charts, KYC/AML information for every investor, audited financials, and regulatory filings.
Then comes the compliance calls and operational questionnaires. Even after approval, brokers run ongoing surveillance on the funds they service.
Simple requests, like adding a new sub-account or trading a new asset type, can take weeks. Funds must also complete annual certifications, provide updated ownership disclosures, and respond to periodic broker audits. The relationship never just “runs” — it’s a constant loop of reviews, sign-offs, and checks.
Auditors, Administrators, and Lawyers: The Operational Core
Running a hedge fund means coordinating with three key outside partners — and each relationship eats time:
Auditors check every trade, bank movement, and valuation. During audit season, managers can spend 60–80 hours a month answering questions, sending records, and proving every number — sometimes for trades from years ago.
Fund administrators calculate NAV, process subscriptions and redemptions, and issue statements. Keeping their books and yours in sync typically demands 40–60 hours a month of reconciliations, file transfers, and variance checks.
Lawyers review offering documents, investor agreements, and compliance policies. Even small changes can require 20–40 hours a month of calls, redlines, and approvals.
That adds up: many funds spend 100–150 hours per month just on admin coordination — the equivalent of several full workweeks.
The Hidden Workload
Behind every trade lies a mountain of unseen effort. For every investment decision you see, there are hundreds of quiet administrative steps — tax filings, capital account reconciliations, valuation sign-offs, investor due-diligence forms, cash reconciliations, and more.
Ask any fund manager privately, and they’ll tell you — half their time isn’t spent trading; it’s spent managing operations.
Conclusion
It’s easy to underestimate the invisible side of the business: the hundreds of hours spent on legal reviews, audit responses, AML verifications, and brokerage approvals. Yet that’s the foundation that allows the visible side — the trades, the performance, the ideas — to exist at all.